Becker Chap 3 Sim 1 #1 (Jones)
FMV in property contributed = 120,000
liability associated with property = 60,000
AB in property contributed = 100,000
cash contributed = 0
cash distributed to Jones = 10,000
Here's my answer:
Recognized gain = lesser of boot received (10,000) or built in gain (20,000). So 10,000
Jone's new AB = old AB (100,000) + gain recognized (10,000) - boot received (60,000) = 50,000
Corp's new AB = old AB (100,000) + gain recognized by Jones (10,000) = 110,000
Becker says:
Recognized gain = lesser of boot received (10,000) or built in gain (20,000). So 10,000
Jone's new AB = old AB (100,000) - boot received (60,000) = 40,000
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